PRECIPITATION NORTHWEST (PNW) AND SOAK LLC

RE: STATUS OF PORTLAND REGIONAL TRANSITION -- JANUARY 2017

Greetings friends,

It’s been just over one year since the board of Precipitation Northwest (PNW) was created to help transition Portland’s Regional Burn SOAK into a nonprofit model. We’re excited to share with you the progress we’ve made over the last year, challenges we’ve encountered, milestones we’ve accomplished, and next steps.

ACTIVITIES

Initial Start-up Activities. In early 2016, the PNW board was kept busy with holding our first board meetings, establishing meeting schedules, setting up communication channels, formalizing officer elections, and setting up to-do lists. Our goal from the outset was to establish the business according to best practices, ensure efficient collaboration, and make our new systems inheritable.

Integrated 2016 GLC Leadership Conference Learnings. PNW representatives attended Burning Man’s Global Leadership Conference at Burning Man Headquarters in California in April 2016, where we learned about the work and efforts of other regional organizations and events like ours. We networked with other community leaders, and learned a lot!

Established Administrative Systems. PNW board members completed critical training in board leadership, legal requirements, human resources, and Quickbooks accounting that have helped prepare us to efficiently, effectively, and responsibly take on the management of our new organization.

Expanded Board with Addition of Two New Members. After a self-assessment of our skills and capacity limitations, PNW identified a need for an expanded board specifically in the areas of finance, legal, and human resources. We are proud to announce two new board members as of January 2017: Ariel Rigney and Ryan Krellwitz. Ariel brings extensive administrative, fundraising, and event planning experience, as well as a Master’s Degree in Nonprofit Management. Ryan brings expertise in entrepreneurial startups, accounting, and staff supervision, as well as experience with facilitating collaborative performing arts shows.

PNW BOARD MILESTONES

January 1, 2016 - First PNW Board Meeting

February 14, 2016 - First public announcement of PNW at Town Hall 2016

CHALLENGES

Corporate Form.PNW was established as an LLC prior to January 2016, and we were initially assured that this was the correct legal structure for us to utilize. Unfortunately, upon further investigation, we discovered that the organization had been incorrectly set up and would need to be reestablished as a nonprofit corporation. PNW researched corrective action and in just eight weeks we successfully filed our bylaws and the other proper legal paperwork with the State of Oregon to formally establish PNW as an Oregon nonprofit.

Asset Donation Between SOAK LLC and PNW.PNW and SOAK LLC have been engaged in ongoing, detailed negotiations to arrange the donation of assets and the timing of the donations relative to two things: 1) PNW’s pending 501(c)3 non-profit status and 2) SOAK, LLC completing its tax filings for all prior years of operation. SOAK, LLC has filed 2012 and 2015, and is currently catching up on filing taxes for years 2013 and 2014. Following those filings will be 2016. It would unfairly expose SOAK, LLC to potentially substantial tax liability to donate the source of revenue to pay its taxes before those filings have been accepted by the IRS. It would be ideal if that donation could all be made after PNW has been granted its nonprofit status, but that takes substantial time and effort as well. Since we are dealing with the IRS for our tax filings as well as our nonprofit status, some aspect of the timing of this transition are not in the control of either entity. Both entities are dedicated to ensuring that PNW and SOAK, LLC are protected from tax liability resulting from our community events and operations. While both parties are working diligently to complete this transition as soon as possible, including meeting and communicating on a regular basis, all of this remains a tremendous amount of work.

Capacity Limitations, especially during Burning Man event season. Our volunteer PNW board has worked hard to manage balancing the time requirements necessary for building a new nonprofit organization with other personal and professional commitments. Burning Man season specifically was a challenge for productivity from July-September 2016. PNW will proactively strategize ways to minimize loss of momentum during the flurry of this period of the year moving forward. The addition of two new board members will directly help mitigate the issue of capacity as well.

NEXT STEPS

Submit the legal paperwork required to gain our 501(c)3 nonprofit tax exempt status. After we submit the paperwork, it can take up to one year for it to be approved, however assuming we are approved, the IRS’s grace period for startup nonprofits will grant us retroactive tax exemption all the way back to our date of incorporation. We are hopeful that the IRS will respond to and approve our application by the end of 2017.

Finalize the donation of assets from SOAK LLC to PNW. We appreciate the due diligence and mentorship provided by Apparatus (the owner of SOAK LLC) as well as the hard work and inspiring precedent set by the SOAK & Burnout volunteer staff and Regional Contacts as we work through this complex process.

Begin recruiting volunteers who want to support PNW’s growth and activities by serving on board committees. We are initially interested in recruiting people to serve on our Program and Finance Committees, and will be considering creating additional committees in the near future. We are looking forward to developing plans to expand programs outside of established events like SOAK and BurnOut to support broad civic engagement across, within, and between the diverse communities of the broader Portland area.

Attend Burning Man’s 2017 Global Leadership Conference in March 2017.This annual event is vital for us to continue to network with other regional community leaders from across the world, as well as helping us stay up to date with the latest best practices and happenings.

Contribute to a successful SOAK*2017 via art grants and event management support. PNW will continue to work closely with SOAK LLC for event management of SOAK, provide ongoing support to event staff and volunteers, and maintain a robust art grant program for the talented event artists.

As we look forward to 2017, we want to express our deep gratitude for the support we’ve received thus far from the community. We recognize that transparency is a critical mechanism of trust and goodwill, and therefore a major theme in 2017 will be to improve communications over last year. We plan to make more regular updates to our website (www.precipitationnw.org), and also welcome questions and feedback any time by contacting us atboard@precipitationnw.org. We will also keep you informed of the process to resolve the tax burden and when that is complete we will share plans for recouping any associated costs.

We look forward to sharing more details about our progress and future plans at the upcoming Town Hall Meeting on February 12th, where you will also have the opportunity to meet new and returning board members, ask more questions, and find out how you can get involved.